How To Profit In A $29 Billion “New Biotech” Sector

Frankly, it’s about time.

Of course, there’s the heavy, even horrific human toll of these afflictions. That’s probably impossible to quantify and, besides, that discussion is probably best left to mental health professionals.

What is quantifiable is the cost to the public and private sector.

Take anxiety – a common enough condition. Globally, 284 million people are afflicted. In terms of bottom lines, the lost productivity alone costs us $1 trillion. The outlays for drugs used to treat this malady add another $4.7 billion to that tally.

The treatments for depression, attention-deficit hyperactivity disorder (ADHD), and addiction are just as expensive, costing an additional $9.6 billion, $9.5 billion, and $5.8 billion, respectively, on a worldwide basis.

That’s some serious coin. And the treatments, expensive as they are, frankly aren’t doing such a hot job easing the suffering of family members, friends, co-workers – or even ourselves.

And this is just one example of a potentially huge market.

According to Data Bridge Market Research, the market for psychedelic drugs could grow from about $2.01 billion last year to $6.86 billion in 2027 – a compound-annual growth rate (CAGR) of 16.3%.

Other forecasts are even more upbeat: ResearchAndMarkets Inc. says this opportunity will zoom from $4.75 billion last year to $10.75 billion in 2027.

From all the years I’ve spent doing this, I can say one thing with confidence: In paradigm-shifting markets like this one, forecasts of this kind often understate the upside and the growth-rate potential.

For instance, if you take the drug markets for just the four maladies we talked about a moment ago, you’re talking about an aggregate opportunity of $29.6 billion – a total that’s more than double the ResearchAndMarkets forecast.

Now, the obvious way to play this development is the SPDR S&P Biotech ETF (NYSEArca: XBI). The timing is pretty fortuitous, too; the sector has taken some heavy fire lately courtesy of worries over Pfizer Inc. (NYSE: PFE) and Moderna Inc. (Nasdaq: MRNA) mRNA vaccine patents. This is a good dip to buy – and a trend you definitely want to ride.

But there are some even better direct plays on the “Shroom Boom.” These companies haven’t exactly hit the S&P 500 yet; we’re still in “ground floor” territory.

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Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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